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The biggest news to emerge from the South Korean market in the early part of 2009 has been the Korean Communications Commission (KCC) consent to allow for the KT and KTF merger to go ahead. This will come as a significant blow to SK Telecom, which had hoped to overthrow the decision, citing that the dominance of KT in the fixed-line and broadband market, with KTF, a second ranked mobile market, would both stymie growth in the market and be anti-competitive overall. That said, SK Telecom itself enlarged its market position, having previously acquired the broadband operations of Hanaro Telecom, renaming itself as SK Broadband.
The consolidation occurring across the South Korean mobile market is a clear indication of the increasingly competitive and pressurised environment operators are finding themselves in. In an effort to offset the downward effect which this is having on ARPU rates, SK Telecom, KTF and LG Telecom have focused greater efforts on delivering 3G subscriber growth via W-CDMA and CDMA2000 EV-DO Rev A. To this end, all three operators have seen success, announcing at the end of 2008 a collective subscriber base of 24.175mn, accounting for 53% of the total and up from 29.7% just one year earlier.
This has largely been brought about by the procurement of new handsets, but more importantly, strong marketing and promotional activity. Further to this, operators have continued to invest in bringing about a greater level of mobile content. For the first time, the report has provided a new section on mobile content across the South Korean market, taking a look at some of the more popular applications used by operators. In view of this, we have kept our fixed-line and internet sections unchanged, and will look at these two markets in greater detail over the coming quarter.
With regard to the internet market, the KCC has actively been making announcements pertaining to the deployment of a national broadband network offering speeds of around 1Gbps by 2012, by investing approximately KRW34trn (US$24.6mn). This speed will relate to the fixed-line broadband sector, while the wireless broadband network will offer speeds of 10Mbps by the same date. This is largely designed to improve the country's economic prospects, and the KCC has stated that it hopes around 12,000 new jobs will be created as a result of the project.
South Korea's economy has been one of the worst affected by the global recession. We are expecting the economy to grow by 3.3% this year, before falling further to a growth rate of 1.8% in 2010. That said, South Korea maintained its fourth-ranked position across the Business Environment Ratings. With a total score of 68.7, it came just ahead of Australia (68), but still a few points behind third-placed Hong Kong (71.5).
South Korea Telecommunications Report Q2 2009: http://www.companiesandmarkets.com/r.ashx?id=W74C151EL84549
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